While Coinbase has already delisted USDT in anticipation of MiCA, other prominent exchanges such as Binance and Crypto.com continue to trade the stablecoin as they await clarity from regulators. Amid rising speculation on social media about Tether’s future in Europe, questions remain regarding USDT’s compliance with the EU’s stricter rules and its potential impact on crypto liquidity.

Coinbase’s Proactive Delisting

The first major sign of trouble for USDT in Europe came earlier this month when Coinbase—a leading U.S.-based exchange—delisted Tether for its EU customers. The company cited compliance concerns in light of MiCA’s upcoming requirements. Coinbase’s decision sparked intense debate across the crypto community, with some market participants applauding the precautionary approach, while others argued that Tether’s fate should hinge on explicit guidance from European regulators.

Despite Coinbase’s move, no official EU body has formally deemed USDT non-compliant. MiCA imposes rigorous standards on stablecoin issuers, requiring e-money licenses, independent reserves in recognized banks, and detailed disclosure obligations. However, the European Securities and Markets Authority (ESMA) has yet to confirm whether Tether meets or fails these benchmarks.

Exchanges in ‘Wait-and-See’ Mode

While Coinbase took immediate action, other major exchanges have adopted a more cautious approach. Binance and Crypto.com continue to list USDT for EU clients, and many appear to be awaiting explicit directives from European regulators before deciding whether to follow Coinbase’s lead. Some analysts suggest that these platforms may opt for a phased delisting—if it becomes necessary—in order to minimize market disruptions.

Juan Ignacio Ibañez, a member of the Technical Committee of the MiCA Crypto Alliance, notes that “no regulators have explicitly stated that USDT isn’t compliant, but this does not mean that it is.” He also indicates that differing responses from exchanges—some delisting quickly, others waiting for definitive statements—may create confusion in the short term. Bloomberg has reported that many European exchanges will likely delist Tether by December 30. However, no official timetable has been confirmed by ESMA or any other EU supervisory authority.

Implications for Liquidity and Market Stability

Tether (USDT) stands as the largest stablecoin by market capitalization, long serving as a staple for liquidity on digital asset exchanges. Its removal from key European trading venues could significantly affect cross-border transactions, arbitrage opportunities, and overall market depth. Many crypto traders rely on USDT pairs for convenient and rapid movement between cryptocurrencies and fiat-like assets, especially during times of high volatility.

Market observers warn that if USDT disappears from EU exchanges, European traders may pivot to alternatives like Circle’s USDC, which already holds an e-money license in the EU, or euro-backed stablecoins. However, this transition could introduce new frictions, such as additional trading fees, fewer trading pairs, or less liquidity. Pascal St-Jean, CEO of crypto asset manager 3iQ Corp., has highlighted Tether’s centrality by noting that “a vast proportion of crypto assets trade in pairs against Tether’s USDT.”

Regulatory Hurdles and Transitional Phases

Under MiCA, stablecoin issuers are required to secure licenses and maintain transparent reserves. The regulation’s implementation phase officially ends on December 30, 2024, but the legislation also includes an 18-month “grandfathering” period that can extend compliance deadlines to mid-2026 for some entities. During this transitional window, providers already operating under national laws in EU member states may continue services while working toward full authorization.

ESMA has published a list of how different EU jurisdictions plan to apply these transitional measures, with some allowing up to 18 months of “grandfathering” and others permitting shorter timeframes of six to 12 months. This patchwork of transitional periods could lead to inconsistent approaches across member states, complicating the stablecoin landscape further.

Social Media Speculation and Corporate Response

Amid the regulatory uncertainty, rumors have been swirling across crypto forums and social media about Tether’s immediate delisting from EU platforms. A tweet from one influencer, “@RippleXrpie,” claimed that “$USDT will be delisted from EU exchanges” on December 30, predicting another stablecoin would fill the gap. Although such commentary has fueled fear, uncertainty, and doubt (FUD), no formal pan-EU delisting mandate has been announced.

Paolo Ardoino, CEO of Tether, has repeatedly dismissed the speculation as a “poorly coordinated effort” by competitors and critics. The company emphasizes its belief that Tether’s reserves are secure and that it is making strides toward regulatory compliance worldwide. Nonetheless, Tether has not yet obtained the official license that MiCA requires for stablecoin issuers, in contrast to its rival Circle, which has been MiCA-compliant since mid-2024.

Source: X

Past Scrutiny and the ‘Too Big to Fail’ Debate

Tether has long been a lightning rod for criticism regarding its reserve transparency, with some questioning the rigor of its attestations. In previous years, the company has faced legal challenges and fines from various authorities, yet has continued to expand globally. With a market value once reported at over $138 billion, some market analysts argue that Tether has reached a “too big to fail” status in the broader crypto ecosystem.

Critics counter that no stablecoin is immune to future restrictions if it fails to meet emerging regulatory standards, pointing to the EU’s robust legal framework as evidence that tighter oversight is inevitable. Others speculate that Tether’s historical resilience might help it overcome its current hurdles, particularly as it invests in European companies—such as Quantoz and StablR—to strengthen its foothold on the continent.